A CIKK MAGYAR NYELVŰ VÁLTOZATA

 The National Assembly accepted the proposals for changes in regulations to help troubled loans out on Monday. Among other things, the terms of maturity extensions, prepayments, contract modification, and the applicable exchange rate are to be changed.

The current modification affects only those loans, borrowings, lease agreements and housing loans which relate to individuals.  

The approved proposal adopt a decrease of costs chargeable in case of early repayment from 2-2.5% to 1% (1.5% for loans financed debenture-mortgages). The only exception under this rule is when the loan is repaid by a loan borrowed from another financial institutions, or if the prepayment exceeds half of the total amount of the loan.

If 2 years have passed from the duration of the loan agreement, the early repayment will be free of charge once every five years, provided that the repayment does not come from a loan of another financial instititution. In cases when the debt does not exceed 1 million HUF and no repayment has been done in the preceding 12 months, the prepayment or the final repayment will be free of charge.

Once every five years, an extension of the duration of the loan will also be free of charge.

Those loans which are denominated in foreign currency but the repayments are made in HUF, the financial institutions will be obliged to apply their own official average exchange rates or in case they do not have they have to apply the official exchange rate of the Hungarian National Bank. This conversion rate applies to calculate the amount of the loan, the instalments to pay, the mortgages, any costs, fees and charges. The date and methodology used for conversion have to be filed in their Business Policy.

The amendment also states that the loan can not be modified adversely to the client, except the interest rate changes, but only if the government grants permission to such change in a governmental order. Such cases can be the changes in the national bank rate, refinancing rates, money market indexes, the regulatory environment, and credit risk modification.

Troubled borrowers who default to pay will have to pay additional costs for late payment only for 90 days, afterwards only the normal costs and interest can be charged on them. This rule also applies retroactively, thus the 90 days for the previously canceled contracts starts after the law enters into force.

Certain parts of the new rules will come into force in late November already, while the rest will be effective from mid-December.

A CIKK MAGYAR NYELVŰ VÁLTOZATA